ReNew Power enters hydro sector, acquires Larsen & Toubro unit

Infrastructure major Lar­sen & Toubro (L&T) sold its 99-megawatt (Mw) hydro power project to ReNew Power, marking its entry in the hydro sector.
 
Separately, ReNew, which is set to list on the New York Sto­ck Exchange, also acquired 260 Mw/330Mwp of operating sol­ar project in Telangana. It peg­ged the combined enterprise value of the two acquisitions, including L&T’s project, at Rs 2,850 crore ($384 million).
 
As part of the deal with L&T, ReNew will take over L&T Utta­ranchal Hydropower, whi­ch owns the Singoli-Bhatwari Hydroelectric Project (SBHEP), from L&T Power Development, a wholly-owned subsidiary of the company. ReNew will also absorb the project operations team of SBHEP. The sale consideration is Rs 985 crore, said a statement by L&T, and the transaction is expected to be closed before September 30. L&T company said, this is in line with the L&T’s focus of divesting non-core assets and improving shareholder value.

 

“This development is a significant step in our effort to unlock the value of some of our power development assets to streamline and allocate capital to create long-term value for our shareholders,” said D K Sen, whole-time director of L&T, adding that they are aim­ing to become a more ass­et-light organisation.
 
As the project is operati­onal, there would be no cons­truction cost for ReNew. Add­itionally, it was commissioned after March 2019, the power purchase from this project can be used to avail Hydropower Purchase Obligation (HPO) by the procurers. HPO requires states/discoms to meet a cert­ain portion of their energy de­m­and from hydro power.

 
ReNew Power said the add­ition of SBHEP, which has a pondage capacity of 2-3 hours, adds 200–300 Mw of low-cost hydro storage to ReNew’s portfolio. Last year, ReNew won the country’s first round-the-clock renewable project, which will have a hybrid capacity, including 0.9 Gw wind power, 0.4 Gw solar power, along with corresponding energy storage with an investment of Rs 9,000 crore.
 
Sumant Sinha, ReNew Po­w­­er’s CEO, said the firm will acquire more hydro assets as they offer the best clean balancing sources for intermittent renewable energy. Hydro po­wer and gas-based power projects are used for balancing purposes due to their quick start-up time. While coal is used as base power, renewable energy sources like solar and wind power are intermittent. Hydro is used to iron out the intermittency of solar and wind.